Your Money’s Worth


Ah, New Year’s res­o­lu­tions. So easy to make, so hard to keep. There are many strate­gies you can em­ploy in 2015 that have the po­ten­tial to sig­nif­i­cantly im­prove your net worth. Don’t pro­cras­ti­nate. What you do in the next month may have long-last­ing im­pacts.

Re­fi­nance. Don’t wait any longer. Be proac­tive and get your re­fi­nanc­ing done now. Get the low rates while you can. Many peo­ple as­sume that they can­not qual­ify for a home loan. They think they don’t have enough in­come, or their home is un­der­wa­ter, or they don’t have enough eq­uity. Don’t as­sume. Check with your lender this month. You may find that there are ways to lower your pay­ments or pay off your home faster as you take ad­van­tage of an­nual per­cent­age rates (APRs) in the 3’s and 4’s, even for jumbo loans. If you can’t qual­ify right away, find out what you need to do to po­si­tion your­self to get ap­proved later this year.

Con­vert an ad­justable-rate mort­gage to a fixed-rate loan to take ad­van­tage of fixed, sta­ble rates. Con­sider if mov­ing credit-card and other debt to your home loan is a good op­tion for you. Maybe you think you don’t want to bor­row more money. But guess what? You al­ready have bor­rowed the money and chances are your credit-card rates are in the dou­ble dig­its. If you feel you are not dis­ci­plined enough to over­pay your new, lower-rate mort­gage to pay off the old credit-card debt, then seg­re­gate the new debt with a home eq­uity line of credit (HELOC) to pay it off and get your fi­nan­cial house in or­der. Ei­ther way, re­fi­nanc­ing and pay­ing off ex­ist­ing debts may end up sav­ing you more in the long run.

Get free and clear. Even a loan with a rate in the mid 4’s with 28 years re­main­ing could be moved to a 20- or 15-year fixed-rate loan, cut­ting many years off the mort­gage and po­ten­tially sav­ing your net worth tens of thou­sands of dol­lars over the life of the loan. Con­sol­i­date your first and sec­ond mort­gages into one new, low, fixe­drate loan. Check with your loan orig­i­na­tor to see how you can merge two mort­gages on your home into one.

Cash out eq­uity in your home to buy an in­vest­ment prop­erty or sec­ond home for re­tire­ment. How? Re­fi­nance your cur­rent pri­mary res­i­dence and take ex­tra cash out for the down pay­ment on your ad­di­tional home pur­chase. We are see­ing a com­bi­na­tion of low rates and low home prices, but it won’t last for­ever. Rent your new pur­chase and let the pay­ments from your ten­ants help pay your mort­gage.

Grow your in­vest­ment for re­tire­ment us­ing short-term rental prop­er­ties. Use rental pay­ments from va­ca­tion­ers as a re­source for monthly mort­gage pay­ments on in­vest­ment proper­i­ties. For as lit­tle as 20 per­cent down youmay be able to own the prop­erty free and clear in 15 years.

Ad­dress fam­ily mat­ters now while the mar­ket is in your fa­vor. If you are di­vorc­ing or need to take for­mer part­ners off a mort­gage loan, or need to re­move your­self as a co-signer on a loan, re­fi­nanc­ing now may be the right­move for you.

You’ve heard it for a cou­ple of years now: refi refi refi. Even if you re­fi­nanced a few years ago, APRs in the 3’s and 4’s war­rant one more look as you plan your fi­nances for the next 10 to 30 years. Don’t wait and be sorry later. Con­tact your lo­cal lender to see if youmay qual­ify.

Fran­cis Phillips ( is se­nior mort­gage loan orig­i­na­tor with First Choice Loan Ser­vices in Santa Fe. He has served as direc­tor of busi­ness devel­op­ment for na­tional mort­gage com­pa­nies. He and his mort­gage part­ners have funded and built three homes for Santa Fe Habi­tat for Hu­man­ity.

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